Knowing when to change the âmusicâ within a portfolio takes a lot of discipline

“The Dance” by Garth Brooks is my favorite song of all time. I cannot explain it, but every time I hear the haunting piano melody in the introduction, it stops me dead in my tracks and I have to continue listening. In a similar way, money invokes a variety of emotions for people that in some cases can be counterproductive. Being able to understand what these emotions are and how to keep them under control can be one of the best ways to help you achieve your goals.

Psychologists have long told about the “right brain vs. left brain” phenomenon that I summarize too succinctly as the right side of the brain controls creative aspects of our thinking while the left side of the brain controls a more logical approach to our thinking. Both of these sides are vital to our thinking process, and our ability to find the right blend of both sides is helpful to our decision making.

What emotions come to mind when you hear the opening chords of your favorite song? Hopefully the notes and melody take you to your own happy place. The greatest artists of all time have been able to move us through original creations in many different ways. In a lot of scenarios you may not be able to explain why you like a song, a painting, or a certain food; you just know that you do. For some aspects of our lives, that “like it” test is more than sufficient to determine satisfaction. In other cases, such as your financial life, I would argue that a more logical approach is necessary.

Just like a song can elicit an emotional response, certain words can have the same effect on people. When people hear words like “investing”, “retirement”, or “market”, the effect may be very different from person to person. In times that the stock market is doing well, these words may make you feel happy, while in the midst of a correction, you may feel anxious or angry. Money is often added to a list of taboo topics including politics and religion. In many instances a conversation about finances can cause one party to be angry or jealous.

Different parts of a market cycle can call for different styles of investing to help give you the best risk-adjusted return over time. This is the same idea as pairing different music to circumstances in your life. Sometimes you want to have a relaxing melody as background music as you work, but when it is time to have an energetic workout, the music should be more intense and upbeat. Knowing when to change the “music” within a portfolio takes a lot of discipline, but when you hire a portfolio manager with a proven process for managing assets, this becomes second nature.

The past several years in the market have been positive following the worst bear market since the Great Depression. There have been many ups and downs to get to where we are today, near all-time market highs, and unfortunately that is what it means to be an investor. As the lyrics to “The Dance” say “I could have missed the pain, but I’d had to miss the dance.” When it comes to going through the market cycle there is some pain from time to time, but sticking with a plan and evaluating your tolerance for risk may help you achieve higher returns over time. There is always going to be noise about what is going on in the market and the economy and turning on the news is a great example. Financial markets follow a certain rhythm and hearing this music through all of the noise and commotion is difficult but not impossible to do.

Throughout this year, we look forward to several changes to the music we have been hearing in the market and anticipate that at some point this year we could be hearing some unpleasant sounds. Whether you make your own portfolio management decisions or leave it to a trusted professional, it is important to monitor your assets on an ongoing basis to ensure you are on track for your long term goals. Our process for managing assets is suggesting that a cautious approach to investing this year can be prudent following the gains we have seen in recent history. Despite that outlook for our domestic stock market, there are still a lot of attractive opportunities outside our economy, and we feel that investors can benefit from a global approach as the market will inevitably change its tune.

Times like the current market environment often offer the best opportunities to reassess where you stand and make sure you are able to face the music no matter what it brings. Unlike the lyrics to my favorite song, I don’t feel “our lives are better left to chance” when it comes to your financial well being.

This article was written by Brad Sanders CFP®, CRPC®, Senior Financial Advisor at Econ Wealth Management in Harrisburg, PA (717-545-5870). The accuracy and completeness of this article are not guaranteed. The opinions expressed are those of the author and are not necessarily those of Wells Fargo Advisors Financial Network or its affiliates.

The material is distributed solely for informational purposes and is not a solicitation or an offer to buy any security or instrument to participate in any trading strategy. Investment products and services are offered through Wells Fargo Advisors Financial Network, LLC (WFAFN), and Member SIPC. Econ Wealth Management is a separate entity from WFAFN. Investments in securities and insurance products are: NOT FDIC-INSURED/NOT BANK- GUARANTEED/MAY LOSE VALUE.

The opinions expressed in this column are solely the writer’s and do not reflect the opinions of PennLive.com or The Patriot-News.

Before acting on any financial advice, readers should consider whether it is suitable for their circumstance and consider seeking advice from a financial or investment adviser.Â

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